2000 (4) TMI 670 - AT - Central Excise

Issues Involved:
1. Allegation of clandestine removal of stainless steel flats without payment of duty.
2. Reliance on evidence from notebooks and statements.
3. Non-consideration of appellants' submitted evidence and expert opinions.
4. Invocation of extended period for duty demand.
5. Request for disposal on merits without remand.

Detailed Analysis:

1. Allegation of Clandestine Removal:
The impugned order dated 21-11-98 by the Commissioner of Central Excise, New Delhi, upheld the allegation that the appellants cleared 3419.491 Mt of stainless steel flats without paying duty between 1-12-93 and 4-10-94. Consequently, a duty of Rs. 1,19,13,799/- was deemed recoverable under Rule 9(2) of the Central Excise Rules read with Section 11A(i) of the Central Excise Act. A penalty of Rs. 75 lakhs was imposed, and land and buildings were ordered to be confiscated under Rule 173Q(2) with an option to redeem them on payment of Rs. 10 lakhs.

2. Reliance on Evidence:
The Department's case was based on five notebooks seized from A-32 Wazirpur Industrial Area, Delhi, and statements from Shri B.K. Arya, alleged to be a former employee of the appellants. The appellants disputed Arya's employment and the interpretation of the notebook entries. They argued that the notings lacked independent corroboration and no evidence of excess electricity consumption, raw material stock discrepancies, or transporter statements supported the allegations. The appellants also contested the assumption that Arya made the entries and criticized the denial of cross-examination and handwriting expert examination.

3. Non-Consideration of Submitted Evidence:
The appellants claimed the adjudicating authority ignored crucial documents and expert opinions, including:
- A certificate from the Enforcement Officer of Employees Provident Fund.
- A Chartered Accountant's certificate on electricity consumption.
- Certificates from the Haryana State Electricity Board and metallurgists on production capacity.
- A retraction statement from Shri B.K. Arya.
- Daily production reports.

The appellants argued that these materials would have disproved the allegations, but the adjudicating authority failed to consider them, rendering the order unsustainable due to non-application of mind.

4. Invocation of Extended Period:
The appellants contended that the extended period for duty demand was unjustified as the Department conducted regular checks and found no discrepancies. They cited the Delhi High Court decision in Gwalior Rayon Silk (Wvg.) Co. Ltd. v. CCE, arguing that simultaneous inspections by audit teams and verifications of power consumption and production reports should preclude the extended period's invocation.

5. Request for Disposal on Merits:
The appellants requested the Tribunal to dispose of the case on merits without remanding it, citing precedents like Dimple Overseas v. CC, Kandla, and M.G. Shahani & Co. (Delhi) Ltd. v. CCE, New Delhi. They argued that the adjudicating authority's failure to address their submissions implied acceptance of their points.

Department's Defense:
The Department defended the impugned order, stating the Commissioner had addressed all contentions. The Commissioner linked the appellants to the Wazirpur premises through gate passes and statements from the General Manager, confirming the receipt and dispatch of goods by Arya from those premises. The Commissioner found Arya's notebook entries and statements credible, corroborated by the General Manager's admissions and the absence of valid GP 1s or invoices for certain goods.

Tribunal's Findings:
The Tribunal found merit in the appellants' claim that their detailed submissions were not fully addressed by the Commissioner. It noted the lack of consideration for evidence on electricity consumption, raw material stocks, and expert opinions. The Tribunal emphasized that expert opinions should not be disregarded without contrary evidence and that legal precedents cited by the appellants required due consideration.

Conclusion:
The Tribunal remanded the matter for fresh adjudication by the Commissioner, instructing a de novo examination of all submissions, evidence, and case law. The appeal was allowed by remand in these terms.

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